On today’s show… lawsuits from patent trolls against automakers have exploded, you won’t believe who wants to buy Pininfarina, and why the UAW better be ready to do some serious horse trading. All that and more coming right up on Autoline Daily.

This is Autoline Daily for March 25th, 2015.

ITALIAN COMPANIES ARE HOT TARGETS
Pininfarina may be the best known independent design firm in the world. And all you tifosi know that Pininfarina is something of a design factory for Ferrari. But now Bloomberg reports that Indian automaker Mahindra is close to buying Pininfarina. No other details are known at this point, but the news sent Pininfarina shares up 10%. Italian companies are turning into juicy targets for takeovers. Reuters reports that ChemChina will buy Pirelli in a $7.7 billion deal. The weak Euro means these companies can be snapped up at bargain prices.

NPEs = PATENT TROLLS
Automakers and suppliers have seen an explosion in lawsuits from patent trolls. A report titled Patent Related Trends in the Automotive Industry, by Brinks Gilson & Lione, one of the largest intellectual property law firms in the U.S. shows that lawsuits from Non-Practicing Entities (NPEs), also known as trolls has turned into a major disruption. Since 2008, there has been a 300% increase in automotive patent litigation, from 51 lawsuits in 2008 to 205 in 2013. It cites a Swiss NPE which filed nearly as many patent infringement cases (69) against auto manufacturers within seven days in 2013 as the top manufacturers and suppliers combined filed in the last six years. “The new frontier in auto industry litigation appears to be battling NPEs and pressure continues to mount on policymakers to provide the industry with some relief from NPE lawsuits.” said Steve Oberholtzer, a partner in the firm.

VIRTUAL KEYS COMING TO FLEETS
Car-sharing is becoming ever more popular, so giant German supplier Continental and a Belgian company D’leteren are forming a joint venture called OTA keys, that will offer virtual car keys to fleet operators. Say you want to rent a car. You would reserve one with your smartphone, and then OTA keys then sends a digital encrypted file to your smartphone. You then use that virtual car key, via Bluetooth, to get into the car. Currently, OTA keys only unlocks and locks doors and starts the car but in the future it could be used to transmit favorite radio stations or seat preferences. The service starts in Europe but go to Asia and America as well.

Coming up next, Jaguar unveils a new XF, but can you spot the new one?

ARE YOU THE NEW XF?
In case you missed it, Jaguar’s all-new XF performed its high-wire act yesterday across London’s Canary Wharf. The exterior design of the car hasn’t changed all that much from the previous model, but you may notice a reworked front and rear fascia. It is 2-inches longer and thanks to an aluminum-intensive architecture was able to drop up to 420-pounds. Power comes from a host of gasoline and diesel engines, with range-topping forced-induction V6’s of each type. Inside there’s a new driver’s instrument cluster and JLR’s all-new InControl Touch Pro infotainment system, which features a 10-inch touchscreen that can be split to display something different to the driver and passenger. The all-new Jaguar XF makes its public debut at next week’s New York auto show.

Coming up next, the UAW is great at telling everyone what it wants, but what is it willing to give up?

IS UAW WILLING TO GIVE OR JUST TAKE?
UAW delegates are in Detroit this week to plot their strategy on a new labor contract with General Motors, Ford and FCA. We’re hearing a lot about what they want, but what we’re not hearing is what they’re willing to trade off.

As we showed you yesterday, the Detroit automakers still have higher labor costs than all the transplants except the Mercedes plant in Alabama. The Detroit Three’s labor costs are still $10 an hour higher than Toyota’s and Nissan’s. Even so, the UAW wants a raise, better their benefits, and the elimination of the entry level wage.

Even though legacy UAW workers have not had a raise in 10 years, they’ve received lump sum payments and profit sharing. Ford workers, for example have earned $30,000 in profit sharing in the last four years. So they’re making a lot more money than they did a decade ago. Nonetheless, the workers should share in the prosperity they’ve helped to generate. The trick is to increase compensation without making the car companies uncompetitive.

Here’s my Autoline Insight. The union should push for more profit sharing. And it should be willing to have its workers paid in stock and options, just like top management. After all, if Wall Street is reaping most of the riches of America’s resurgence, why not give a little bit of Wall Street to blue collar workers? I think that’s the fastest way to bridge the gap in income inequality.

And if the union wants to have the automakers give up their entry level wage, commonly called Tier Two, then they better be ready to do some serious horse trading. The automakers would love to off-load their pension obligation and replace it with a 401k. I think something could be worked out like the VEBA, which offloaded the automakers’ health care obligations.

Taking those pension obligations off the books would produce an instant boost in the stock price of each company. And if workers were getting some of that stock, some of their sacrifice would go right into their pockets.

The point is, there are points of mutual benefits that each party can reach, by being flexible, creative and keeping an eye on staying competitive.

Anyway, that’s my take on the situation. And that wraps up today’s show, thanks for watching and please join us again tomorrow.

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I think there is another point to the Italian story. Italy is a famous source of artistic creativity. It may be a way for the Chinese to buy the creative output (Vehicle body designs, fashionable clothing, etc.) and then combine it with there ascending manufacturing prowess. It again speaks to passionate desire of the Chinese to be the center of the Automotive industry.

Off topic – Want some fun? Use the Porsche Macan configurator. I started with the base model and carefully added some selected options. Really nothing crazy – just a few performance and comfort bits. The result? My final price was 154% of the base model S. I think you might actually be able to double the price of the car if you added everything. That’s nuts.

John – I don’t think you can make a direct comparison in wages when you include profit sharing. First – some companies have it and some don’t so that muddies the water, 2nd because it’s a floating number what year do you use to compare? or do you take the medium? But I think the most important point would be that it’s ” profit sharing” if the company isn’t making as much the worker’s wage goes down, but of course if they are making more the wage goes up but isn’t that a good thing? In other words when you compare wages including the profit sharing isn’t it a good thing that your workers are at or near the top? doesn’t that mean you are making lots of $$$$$$$ or wold you rather make less money so your total compensation is less?

2 The best available option is European delivery, which is free. That would be fun, touring the plant, etc. Still, with no options, the Macan is a kind of pricey $54K, but I’m sure it drives well, for a CUV.

9.10 Weird what people value. One way I look at it is that we’re meaning machines and herd animals. Look at how much more brands can charge for t-shirts with a high end logo’s content. And what’s someone with a high income but low auto interest to do, but look at what their perceived peers are driving?

14 There’s so much more surface detail in cars today, photos can’t capture it on a screen. I also remember an Autoline where John was talking to designers about paint, and one said she liked working with grays. I notice a lot of other hues in some gray metallic finishes; no way a photo can show that.

18 That is so true. If the current Impala were sold as an Avalon, with Toyota styling cues, it would do great. The Impala is much more luxurious than the current Avalon, ride-wise, and probably has more room. I don’t know the sales numbers of either, though.

I can’t believe how under-whelming the interior has become on the new Jag XF. Jaguar used to be the gold standard of upscale auto interiors with wood, chrome and leather galore. Now it looks like any other bland cabin. Thumbs down, Jaguar. And put the chrome back in that grille!

The UAW has been giving concessions for the last 30 yrs.! The 2-tier wage system lets the company hire these workers at street-level low wages and keeps them there for a LONG period of time, while phasing out the tenured worker. when you figure in the cost abatement figured and the tax depreciation schedule along with hourly plant operating costs (some $5.00 per hr. less) our U.S. plants have a ‘killer’ advantage over costs in Europe. They can afford the increase in wage costs.